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Sen. Dick Durbin (D-Ill.)  (Source: chicagotribune.com)
Senator Dick Durbin (D-Ill.) plans to introduce a bill called the Main Street Fairness Act

Amazon's war on taxes is becoming a tale as old as time. A U.S. state pushes the online retailer to collect taxes, and Amazon simply packs its bags and leaves for the next state that will leave it alone. But this time, that may not be the case.

Amazon is the largest online retailer with over 90 million registered buyers and $34 billion in annual sales. It launched in 1995, and sells everything from food, furniture and apparel to computers, electronics and toys. 

Recently, U.S. states have started pressuring Amazon to collect sales taxes on its items due to the retailer's affiliates operating within those states, and because of large state budget deficits. For example, Texas State Comptroller Susan Combs gave Amazon a $269 million bill in unpaid sales taxes, which led to Amazon's decision to close a local distribution center and cancel all plans to expand in the state of Texas. 

In another instance, Amazon won an exemption on a new sales tax law in South Carolina after saying it would pull a distribution center from the state if forced to collect. Amazon has also cancelled tens of thousands of affiliate accounts in Illinois and Colorado due to tax problems, and has brick-and-mortar chains like Best Buy and Wal-Mart breathing down its neck because of Amazon's "unfair advantage."

The unfair advantage refers to the online sales tax reprieve that was put in place awhile ago to support the then-upcoming industry of online shopping. But now that Amazon is large and in-charge, states and brick-and-mortar retail chains believe this reprieve is no longer necessary.

Now, Amazon may be in an inescapable position as Senator Dick Durbin (D-Ill.) plans to introduce a bill that will require all businesses to collect sales tax "in the state where the consumer resides." The bill is called the Main Street Fairness Act.

"This idea is overdue," said Durbin. "Online retail sales are now very fulsome and are growing at the expense of local units of government." 

Amazon argues that a Supreme Court ruling from 1992 excuses Amazon and other remote sellers from having to collect taxes in U.S. states that do not have the company's employees or warehouses operating within its borders. In addition, Amazon notes that it currently collects taxes in Kansas, Kentucky, New York, North Dakota and Washington, and that buyers in other states where taxes are not collected are to report it themselves, though they rarely do. 

According to a University of Tennessee study, U.S. states will collectively lose $10.1 billion in uncollected sales tax revenue this year. Next year, that number is expected to jump to $11.3 billion. With many state budgets in the red, the collection of online sales tax looks to be a quick fix that they all will continuously push for.

Jeff Bezos, Amazon CEO, has said that he would prefer that the tax situation be "fixed properly" through federal legislation, and this month, he may get his wish. Durbin is gathering support from former mayors and governors who are now in Washington "weighing the budget problems back home," and the issue will go to Capitol Hill by the end of the month.

"Doing it state by state gives the Internet companies an opportunity to go shopping, to find the state that is going to treat them the best," said Durbin. "It certainly argues for a federal approach."

Jason Brewer, vice president for communications and advocacy for the Retail Industry Leaders Association, is unsurprisingly for Durbin's new bill, saying that it's only a matter of time before Amazon will be forced to collect taxes

"Ultimately, this is a battle they are going to lose, and this is about how long they can push off that day of reckoning," said Brewer. "They always claimed to support a federal solution, but they've never lifted a finger to get there."

Even if Amazon loses this battle, it really wouldn't be that bad for the online retail giant. According to analysts at Wells Fargo Securities, Amazon's products would still be cheaper than Wal-Mart or Target even if it had to collect sales tax. In fact, if Amazon had to collect sales tax, it would be 5 to 6 percent cheaper than Wal-Mart and 12 to 13 percent cheaper than Target. In addition, with a sales tax policy in place, Amazon could add new shipping centers anywhere they pleased, and could accelerate shipping time.

With prices remaining lower than brick-and-mortar retailers and items being delivered quicker than ever with cheaper shipping prices, how could Amazon lose?



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RE: B&M Changes?
By Solandri on 6/3/2011 2:34:58 PM , Rating: 5
Actually, macroeconomics (economics on a national scale) does work the opposite of microeconomics (economics on an individual scale) in many cases.

The way it's supposed to work at the macroeconomic level is that the government spends more during bad economic times to stimulate the economy. But during good economic times, the government spends less so as not to overstimulate the economy. Essentially, the government should be spending during bad times, and pay for it by saving during good times.

Unfortunately, we've been doing the former, but not the latter. People who argue the macroeconomic principle of stimulus during bad economic times, suddenly switch to the microeconomic principles during good economic times ("there's lots of money, so let's spend more!"). Like a teenager with his/her first credit card, they latch on to whichever argument justifies the choice they want - to spend more - despite the economic weather.


RE: B&M Changes?
By The Raven on 6/4/2011 3:11:12 AM , Rating: 4
quote:
Like a teenager with his/her first credit card, they latch on to whichever argument justifies the choice they want - to spend more - despite the economic weather.

This is because spending more always makes the lower more populous (voting) classes happier (yeay free stuff!!) and so the politician can get reelected.
Which is why these Keynesian theories should have never been brought into the halls of our gov't.

Money should be invested, and not simply spent if you want economic growth. Last I checked "the gov't" didn't have a fat portfolio of great investments. Leave it to the many various pros in the private sector and we will see real lasting economic growth. Besides, putting all of our eggs in one gov't basket doesn't sound like a good idea, does it? Gov't intervention should be kept to a minimum. If it isn't, then we are (as we are now) at the mercy of the gov't to ensure our currency doesn't turn to crap (even more than it already has). And unfortunately for anyone solely in paper (mostly low income folks), that is not something that the gov't can do.

Who gave the gov't a credit card that taxpayers (and now their children) have to payoff? Short answer: we the people did/do every time we vote for the betterment of our personal situations instead of voting to protect economic freedom. But it seems that since the recession began people are waking up to the fact that we need to cut that card up.
quote:
The way it's supposed to work at the macroeconomic level is that the government spends more during bad economic times to stimulate the economy.

If economic times are so bad, where is that money coming from? They are either printing it or taxing for it. And neither inflation nor taxes are good for economic growth.


RE: B&M Changes?
By BansheeX on 6/4/2011 10:31:18 PM , Rating: 1
In Keynes' defense, he wanted surpluses in good times to pay for the deficits in bad times. Of course, all socialist ideas are wishful thinking doomed to fail because the power of force is too easy to abuse. That's why government powers of force need to be restricted to preventing forceful behavior in others. Force can never be a tool for "the greater good" as it will always result in the opposite.


"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il














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